Opportunity Buyers Push Financial Markets Back to Highs as Housing Numbers Disappoint

Market Recap Week ending 6.25.21

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US Financials markets bounced back from last week’s sell-off as buy the dip buyers stepped in and pushed the S&P 500 above its 50-day moving average. Comments for Fed Chairman J. Powell, who was testifying in front of Congress, helped sustain the rally when he reassured investors that the Fed would not raise rates prematurely. The Fed Chairman also provided a positive outlook for the labor market in the second half of the year. A widely successful stress test on US banks further fueled the rally. The positive results from the test will likely lead to more share buy-backs and an increase in dividends. In Washington, a bipartisan agreement on an infrastructure spending bill was announced. The proposed plan of 1.2 trillion dollars would include 579 billion in new spending. The deal will likely come under more scrutiny as it is tied to additional social spending initiatives.

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The S&P 500 closed at another record high, gaining 2.74% on the week. The Dow rose 3.44% while the NASDAQ added 2.35%, and the Russell 2000 led with an increase of 4.32%. The yield curve steepened over the week, with the 2-year note yield increasing by one basis point to close at 0.27%. The 10-year yield increased by nine basis points to close at 1.54%. Gold prices rose by $10.40 to close at 1778.30 an Oz. Oil prices increased by 3% or $2.39 to close at $74.06 a barrel. Cryptocurrencies were again quite volatile as Bitcoin traded below the critical technical level of 30k.

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Economic data for the week had mixed results. The high cost of housing curbed New Home sales which came in under the consensus estimate. In May, 769k new homes were sold; economists had expected 860k. However, Existing home sales came in at 5.8 million versus the consensus of 5.65 million. Headline PCE prices came in up 0.4% month over month, while the core number, which excludes food and energy, came in at 0.5% month over month. The final reading for June’s University of Michigan’s Consumer Sentiment Index came in at 85.5, slightly lower than May’s final reading of 86.4. Finally, initial claims came in at 411k more than expected, while Continuing Claims showed improvement at 3.39 million.

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Darren Leavitt, CFA

Chief Investment Strategist

With over 20 years of experience in the market, Darren bring a diverse background with multiple areas of expertise. Throughout his career, Darren had held a variety of senior positions including Chief Investment Officer, Chief Financial Officer, Portfolio Manager, Senior Analyst, Senior Trader, and Financial Advisor.

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